LONDON — Touted by its supporters as the best and cheapest way to fight global warming, carbon trading is losing momentum amid the uncertainty created by the failure of the Copenhagen summit meeting and President Barack Obama’s political troubles in the United States.
Investors are steering clear of energy-saving projects meant to generate carbon credits, and traders in Europe are hunkering down through a period of consolidation that is disappointing to those who had hoped carbon markets would grow quickly into a $2 trillion-a-year business.
While the European Union’s Emission Trading System is ticking along, it is looking increasingly likely to be the only big game in town for years to come. Those who see carbon trading as the best way to cut worldwide emissions quickly are wondering if their vision of a global network of markets, encompassing the United States, Australia, Japan and other countries, will ever be realized.
“That bold vision, clearly, that hit a brick wall at Copenhagen,” said Dieter Helm, a professor of energy policy at the University of Oxford who argues that taxing carbon is a more effective way of ensuring emissions cuts. People will go on trading carbon, he said, “but it’s not where the future lies.”
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